Transparency Laws and Inflation May Strain Relationship Between Providers and Insurers

Transparency Laws and inflation may strain relationships

The federal government has begun cracking down and fining hospital systems that fail to publicize the rates they charge for medical procedures. With inflation increasing at record levels, hospitals are protesting that the data they have provided is outdated as all their costs are skyrocketing.

Insurers and plan providers may find that the valuable data they have been expecting from hospitals is already obsolete. Inaccurate data may lead to providers being unable to set appropriate reimbursement rates or offer accurate hospital rate information for their members. This phenomenon could lead to a strain on the historically close relationship between hospitals and insurers.

While inflation may lead to fluctuations in costs, some experts, such as Mark Galvin, President and CEO of MMS Analytics, Inc., believe enforcement of the new transparency requirements will have “a massive effect on the health care marketplace.”  He forecasts that the rules will create knowledge and understanding about health care costs and, ultimately, lower costs.

The “No Surprises Act” that Congress recently enacted has caused some strain between hospitals and insurers, particularly over the amounts of “Qualified Payment Amounts” (QPAs). QPAs are defined payment amounts that insurers pay hospitals for certain medical procedures.

For instance, hospitals that offer “discounts” to plan providers based on inflated rates will be more apparent. In addition, brokers whose compensation depends on plan cost increases will have to justify their annual increases or look at new ways of compensation. Transparency laws also have shed light on previously undisclosed profit margins of some hospital systems. These are examples of ways that the transparency laws may decrease health care costs to prices that consumers find more reasonable and consistent.

The bottom line is that if plans and their members want to benefit from these changes, employers and plans must proactively provide this new data to their members. They may need to consider using tools that help their members make better health care choices, such as reference-based pricing and direct primary care. Knowing how to best access and utilize the newly available data will help them offer the best benefits to their members from both a financial and health perspective.

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